E-mail updates
Follow on Twitter
Subscribe to RSSNEW YORK — The stock market was not exactly surprised that a so-called supercommittee in Congress failed to reach a deal to cut the federal budget deficit. But since summer, investors have sold at the first hint of trouble.
So on Monday, they sold big. The Dow Jones industrial average lost almost 250 points on a day when investors despaired over debt problems at home and abroad.
Members of the special committee, created in August to come up with $1.2 trillion in deficit cuts over 10 years, indicated all day that there would be no deal. After the market closed, the committee's bipartisan leadership made it official.
"They're essentially giving up," said Robert Robis, head of fixed income macro strategies at ING Investment Management.
The supercommittee stalemate is supposed to trigger automatic spending cuts across the government, but there were already hints that Congress would find a way around them. Analysts say that could lead to another downgrade of the U.S. credit rating.
In addition, the failure raises the question of how a gridlocked Congress will find a way to renew a cut in the Social Security tax or agree on whether to extend long-term unemployment benefits.
Congress passed the tax cut last December for one year, and some lawmakers support extending it through 2012 because economic growth remains weak. Both measures would put cash in the pockets of Americans, who can spend it and help the economy grow.
The stalemate also shows lawmakers may not be able to make progress on anything budget-related in the coming months, said Robert Pavlik, chief market strategist with Banyan Partners LLC in New York.
"It shows that there's a bigger problem at hand, and if they can't work to resolve these relatively small yet meaningful issues, what's going to happen if we get into a situation like Europe is in?" he said. "And we're kind of headed there."
The result was another day of heavy selling in a market that has grown used to big swings. The Dow finished down 248.85 points, or 2.1 percent, at 11,547.31. At its low point of the day, the Dow was down 342.
Volatility seized the stock market in late July, when Congress was wrestling with whether to raise the limit on how much the federal government can borrow.
The Dow rose or fell 100 points or more on 15 trading days in August, 16 in September and 15 in October. Monday was its 10th triple-digit move this month, with six trading days to go.
"People are getting so short-term oriented now that all they know is how to make day trades," he said.
The selling swung the Dow from a gain for the year to a loss, the first time that has happened in a month.
In Europe, Moody's, a prominent ratings agency, warned that France could face a downgrade because the debt crisis in Europe has pushed borrowing costs higher for the French government. For now, France has a rating of AAA, the best.
One European country after another has fallen into crisis because of debt. Wary of the ability of countries to pay back their loans, bond investors have insisted on higher returns on national bonds, pushing borrowing costs to dangerous levels.
Stock indexes fell 3.4 percent in both Germany and France — bigger declines than in the United States. Germany and France are the two largest economies in Europe.
Investors still see American debt as safe, despite the failure of the supercommittee. On Monday, the yield on the benchmark 10-year Treasury note fell to 1.97 percent. It traded at 2.01 percent late Friday.
Bond yields move down when bond prices go up. The higher demand for U.S. bonds Monday was a sign that investors believe in their safety.
The Standard & Poor's 500 index dropped 22.67, or 1.9 percent, to 1,192.98. The S&P 500 fell 3.8 percent last week, its worst since September. The Nasdaq composite index declined 49.36, or 1.9 percent, to 2,523.14.
Last week's steepest falls were Wednesday and Thursday, after Fitch, another ratings agency, warned that the European debt crisis could hit the largest American banks. The S&P 500 is down more than 5 percent for the year. On Nov. 15, it was still up slightly.
The declines Monday were broad. Energy and technology stocks lost the most. All 30 stocks in the Dow average fell, led by Boeing Co. with a 4.7 percent decline. The dollar rose along with U.S. Treasury prices.
Gilead Sciences Inc. stock plunged 9 percent, the most in the S&P 500. The company plans to buy drug developer Pharmasset Inc. for $11 billion. Pharmasset, which has an experimental hepatitis C drug in late-stage clinical trials, jumped almost 85 percent.
Alleghany Corp. fell almost 7 percent after the property and casualty insurer said it had agreed to buy the reinsurance company Transatlantic Holdings Inc. for $3.4 billion. Transatlantic edged up almost 1 percent.
Irish electronics company Cooper Industries PLC bucked the market trend, rising 2.6 percent, after S&P said it will be added to the S&P 500 index. Stocks often rally when they are added to major indexes, because investment funds that mirror the indexes must buy them.
Associated Press contributed to this report.
Insight on the stock market, even as the markets come off their worst levels of the day, with Susan Byrne, Westwood Holdings Group, and Tim Leach, U.S. Bank Wealth Management Group.
Leave a Comment:
LMAO,,,did you liberals out there really expect this Super Committee to actually come up with a plan? LMAO... Demoncrats only know how to do two things...Tax and Spend...and when more than half of the Demoncrats in the Senate and House are Multi-Millionaires who are probably making big bucks off of this disaster they created over the past 20 years I doubt very much they will come up with a plan that includes a tax on themselves without a raise for themselves to recover what they would lose in taxes......and...I predicted the Stock Market would sink three weeks ago, so now I am collecting on the bets people made with me...
How can the inept and financially incompetent Demoncrats find anything to cut when they use the Public's money to buy Votes with? They can't without hurting themselves...I surely am enjoying watching them Squirm like the vermin they are! Sooner or later all their crookedness comes home to roost..and it is now time to pay the piper...
Seems to me that Boehner should have taken the 4 trillion dollar deal that Obama offered, and we could have avoided the Tea Party downgrade.
Here are the facts, Bush raised spending 88% during his term, and so far Obama has raised spending just 7.2%. http://ourfuture.org/blog-entry/2011083428/three-charts-email-your-right-wing-brother-law
Republicans don't want to influence the economy to get better or for jobs to recover because they want to defeat Obama and a rosy economy and jobs don't help their case.
It's gonna keep doing this, until it totally collapses! Like the housing market. Bam your all gonna lose your retirement accounts/savings.
Thanks for today's drop repulsivecons along with the previous downgrade.
Vote ALL republicans out of ALL elected offices every chance you get. Take America back!
Stock prices are a bubble. We have not seen the bottom back in March 2009. Dividends, PE ratios will be starkly different at a true long term bottom:
www.kondratieffwavecycle.com/stock-market-big-picture/
Housing market has been kept up by unprecedented government stimulus. Fannie, Freddie are still loosing money to guarantee mortgages at tax payer expense. But bottom is still far away. Major housing crash is coming:
www.kondratieffwavecycle.com/housing-bubble-bust/
Nothing has been fixed. Stimulus was borrowed from the future. Debt was the problem to begin with and we have more of it now. Borrowing and spending does not make a recovery. Soon interest payments on debt will be enough to kill any recovery as you know it. Deflationary crash is coming. Individuals, state, local, federal governments will not have disposable income left to spend. This is the mother of all crashes. 2008 was just the warmup.
In the past economy seemed to be doing OK solely due to credit inflation that FED has fostered. FED made it easy to borrow. America borrowed and spent. When we borrow money, banks create new money out of thin air and give it to us. They do not lend existing money. This inflates the money supply and reduces the value of US dollar. This new money makes it easy to earn. This was the norm for decades! Here is how banks create money:
www.kondratieffwavecycle.com/credit-inflation/
Why does it matter? Well, all of our money supply is bank credit. It is borrowed money. It needs to be paid back as principal + interest. The interest portion is not even created yet. Borrowing MUST increase exponentially so that principal+interest amount exists in the economy so that people can earn it and pay back what they owe. What happens when borrowing stops? Deflationary crash occurs. Debt problem:
www.kondratieffwavecycle.com/web-of-debt/
Debt is denominated in US dollars. It is not denominated in gold. Creditors are asking for US dollars. As borrowers struggle to pay debt, there will be demand for US dollars. Not for gold.
Gotta chuckle at the partisan blame game. One poster blames republicans, another blames democrats. Silly rabbits, BOTH parties are to blame. While all the finger pointing continues nothing gets done, blame game is for adolescents and children and politicans and party faithful.
The rest of us are a wee mite concerned about the debt and the inability of ANYONE in Washington to seem to have a remote or tiny understanding of what is facing this country. The Obama supporters all blame Bush and anyone but Obama and the Obama non-supporters blame him exclusively. As long as the blame game continues nothing will ever happen to improve things. Perhaps that is the real purpose of the blame game, no one is accountable, no one is responsible and all the little politicans think about is getting re-elected.
We democrats did not expect you tea baggers to do anything. We were right. Obama is gonna win again, so we just don't care what you do. A mormon and a hypocrite are your number one and two candidates! LMAO!
Good luck wit dat!
Yup this is change your dumb liberal butts can believe in. Obama is a horrifying, money-spending freak.
So Eddie --did you teatards out there really expect this Super Committee to actually come up with a plan?
Wayne
We conservatives knew you progessive/liberals would do nothing without tax hikes. We told you that you weren't going to get any hikes so why the hell did you waste all that time?
I'll take a Mormon over the liar we have now. If Obama wins again America loses. He is a failure and a divider. At least Carter was just a failure.
Xerox offered a simple application to the use-less government, that would save 100 billion dollars per year by automating record keeping. It was soundly defeated. So that we can pay people 120K a year to play freecell in air conditioned offices as a jobs program that never went away, while our roads and bridges crumble. And of course there's that war on drugs thing that never seems to go away.
Hey JH,
You seem to forgot the disasters you cons have put on America:
george bush jr.------by far America's worst President
Richard "I am not a crook" Nixon-----resigned in disgrace
Ronnie Ray-Guns-----he who introduced us to the failure of trickle down economics.
Thanks but I'll pass on any of the rethugli-con candidates running right now.
I personally believe BOTH parties have sold out the American people but you know what: the American people are just as much to blame. We keep reelecting the same turds every election cycle.
Tumble? up-down makes the money move around! Will be up by weeks end!
Speculation does drive the market to some degree, what typically takes a hit are people's 401k's.
Too much spending, too many promises to spend more, and the Dims have the mob believing it can all be paid for by taxing the rich. You could confiscate everything owned by the Fortune 400 and it wouldn't even cover the deficit for 2012!
The Republicans have protected the rich and corporations at the expense of the poor and middle class. Polls are clear that 70% of Americans think that raising taxes on millionaires are just fine.
Bank on the Republicans to double down on no new revenues so that they can continue their case to cut entitlements.
Vote against Republicans and their "starving the beast" policies in 2012.
PMSnbc, here's your wisdom:same stuff over and over. Just go away!
Stocks hold gains headed into last hour of day
Jobs report, hope for Italy, help stocks end higher
Wall Street set to rise amid Italy vote
Wall Street rallies amid progress in Europe
Wall Street soars amid progress in Europe
Wall Street set for a mixed open
Europe even starting to wear on market's bulls
Wall Street lower amid earnings, euro news
Stocks trading near lows for the session at midday
Stocks end day down as Italy’s borrowing costs rise
Wall Street set to drop on fears about Europe
Wall Street struggles amid fears about Europe
Stocks higher entering mid afternoon in seesaw day
Stocks set to pull back amid economic data
Stocks end day up, helped by good retail report
Stocks slump amid Europe fears, new data
Stock prices sag as price of oil soars
Stocks tumble in mid afternoon, end trading down
Stocks tumble late to end sharply lower
Stocks rose on Wall Street
US stocks set to fall amid deficit talks fear
A short, topsy-turvy week awaits Wall Street
Stocks plunge as debt talks near collapse
I hope they are smart enought to get the point. ROFL
It's like one of those bobble heads with the cord you pull to get it to say stuff.
demos by taxing the rich you in the end tax us all. stop protecting your unions and special interests [and i do'nt mean our seniors].cut the spending and taxes. lets put more money in our pockets so we can spend it.stop blaming the repubs for wanting everyone to keep more of their money.
It called starving the beast and started with Ronald Reagan and "trickle down" economics. It's the republican playbook for ending entitlements.
You want to know what caused the debt, read this.
http://zfacts.com/p/318.html
Eric, If it was the GOP then why was Glass Stegal repealed during the Clinton Administration. If it was the GOP then why did Larry Summers denigrate and later fire the head of the CTFC when she was warning about unregulated CDOs? If it was the GOP then why does over 61 percent of the obama czars and administrators and cabinet all have a Goldman Sachs resume'?
Me thinks thou does not know he is talking about.
So tell me... how exactly are Multinational coporations and Big Oil NOT "Special Interests"? I haven't seen Congress bailing out any Social Security or Medicare recipients lately, and as of last summer Unions only counted for about 7 percent of all the private sector jobs in the US -- that makes them an Endangered Species, not a "Special Interest". And about that money you say the Republican'ts want us to keep in our pockets, I can only assume that you are a member of the 1% club, because NOTHING the Republican'ts have put on the table puts any money in anyone's pockets other than the few, the rich, the original "Special Interest Group".
The Entitlement mentality of the well-to-do is embarassing. The lengths that the Republican'ts have shown themselves willing to go to to give them a free ride is shameful, but the fact that so many intelligent, mature well-educated people have chosen laziness over diligence, blind faith over critical thinking and arrogant slander over honest discourse is a national disgrace.
AC
proudamericanveteran
Eric, If it was the GOP then why was Glass Stegal repealed during the Clinton Administration.
PAV,
It was repealed by a rethugli-con controlled Congress. The sad thing is everyone on here no matter where they are on the political spectrum can find links/articles that justify their positions. Our pols love this as it keeps the American people divided and lets our pols do business as usual. The day of reckoning is coming. Unfortunately it will steam roll over a bunch of bickering Americans.
I hope this falls to zero. Lets all share in the pain.
Maybe some of the idiots that don't like our president to be so tan, will now stop pretending that the dream of being rich is the same as having money.
I'd rather die, then let these messengers of God and Money replace my freedoms. Battle starts now.
We are on our own.
The US economy has been on a slippery slope for a while...same as most other 'advanced economies' ...the model that made these nations successful is now being dismantled as globalisation takes over. Dreams over folks, time to wake up.
I got out of the market last friday. Get out now. The tea baggers are gonna ruin it all. They will do anything to stop Obama. they can't see the forrest for the trees.
the tea baggers and their cut taxes and spending in the end are going to save this market not ruin it.and yes obama has got to go . his actions on stopping the pipeline from canada last week should say it all on what he is really thinking on making this country energy independent [from the middle east] and building private sector jobs.
Wah Wah, Boo-Hoo. Everyone's opinion with a dollar is worth a cup of coffee. Everyone cries buckets of tears then goes out and votes for the same morons that cause the problems. Go and elect someone who will stand against the real problem----Washington D.C. and Wall Street.
i can`t believe, unless you are being paid to do so, anyone could support the party of the 1% and their "starve the beast" agenda. the "beast" they are starving are the 99%.
All right?
Here is the question of the day:
If Wall Street collapses( which I guarantee you, it will not) who has more to lose?
The big boys, or the average working American?
Anyone out there?
Are you thinking?
Because almost anything that can be taken from the American Worker in the form of livable wages or benefits, or even their jobs, pretty much, it has already been taken away by this rapacious capitalists and the politicians on their payroll enacting advantageous legislation for them.
From the smallest office of local Government, all the way up to the Senate and Congress, the stench of corruption is palpable to say the least.
Has anybody visited their local Courthouse as of lately, let's say for a traffic, or city code violation ?
Were you treated as an adult, or as a little boy or girl ?
Has anyone noticed the " Court Dynamics "?
And, did you voted those Judges in? or did they just get elected, and here they are ( The Judges ),
Were you a participant in electing those Judges?
Do you know what their salaries and benefits are ( of the Judges)?
Any clue?
The ballot box for them is just another nuisance, and a requirement they must comply with every four years, that's all.
They ( Special interests, Capitalists, and Politicians ) basically defecate on it ( The ballot Box ) with our help ( The popular vote ).
Sorry folks, it is what it is!
The "super committee" is yet but another attempt to separate the citizens of the United States from our constitution. Here we go again, "No taxation without representation". The super committee is comprised of 12 State congressional members, last time I checked we had 50 states. It is getting very hard not to get sarcastic regarding the developments in our country. It won't be long before we start removing our democratically elected leaders with technocrats. In Europe (Greece, Italy) countries are starting to replace their elected leaders with ex banksters and former Goldman Sachs employees. Yes, the new leaders in Greece (Lucas Papademos) and Italy (Mario Monti) were ex banksters and worked for Goldman Sachs. The point of Democracy is to guarantee the interests of all, not the few.
This "Super Committee" is the beginning of austerity measures to be imposed on the American people. Here's the formula:
1. The Federal Reserve (a group of European bankers neither federal nor a reserve) prints money out of thin air and charges interest on it. Loans its monopoly money to America creating a debtor nation (15 trillion and counting) and economic slaves. The Federal Reserve System is designed to cause economies to fail. If someone loans you two dollars to run your economy and expects three back for the loan and interest, how are you going to pay the third back? You can't unless you borrow more dollars which puts you in perpetual debt and in a constant borrowing cycle to pay off the debt. This is designed not accidental.
2. The interest balloons exponentially and all American personal income taxes are used to pay off the interest.
3. America will not be able to afford the interest if the interest rates go up. The Fed is artificially keeping interest rates down so far (between 0 and 0.25 percent). Many economists say it is just a matter of time before interest rates have to be raised.
4. The Dollar is inflated by printing money (QE1, QE2, and soon QE3) and is losing value. America is being taxed through the devaluation of the dollar and most people don't even know it.
5. The stock market continues to be unregulated and allowed to create all kinds of broker speculation and financial gimmicks such as the derivative markets which are based on non-realistic side bets which are now estimated at 1.4 quadrillion. You have people on Wall Street day trading and speculating making half a million dollars a year in their twenties betting on people being foreclosed on, you need to ask yourself what is the true purpose of our banking system. The derivatives market was illegal for most of the 20th century.
6. MF Global investment corporation the canary in the coal mine goes bankrupt. John Corzine, the CEO, ex Goldman Sachs CEO, New Jersey governor and senator steals at least 600 million of investor's money. The bankruptcy is estimated at 40 billion. The corporation is allowed low capital requirements and 40 to 1 leverage of company assets. Corzine knows that anybody with his connections haven't gone to jail for stealing investors money. Capital and leverage regulations for all corporations are for all intents and purposes non-existent.
7. Countries stop lending the U.S. money and the International Monetary Fund (IMF) steps in and will loan the U.S. money under the stipulation that if America defaults, it will impose austerity measures and privatize (foreclose) American assets.
8. If the American dollar loses its global reserve status the banksters will come in and try to foreclose on America, like what is happening in Greece right now. They are being told to sell off their own country to pay back the people who caused the mess to begin with.
Until the United States gains control over our money, we will never gain control over our debt, it's impossible. We can end the Federal Reserve and coin our own money and regain our sovereignty. In our constitution, in Article 1, Section 8, it stipulates that we can "coin money" as a nation and avoid the Federal Reserve's interest (fee charged on loans) black hole.
Banks, Central banks, World Bank, IMF = Federal Reserve = Debtor economies, Debtor Nations (economic slaves) and carrion for the stock market derivative heist.
When the DJIA drops to somewhere in the 3,500 to 4,500 range, it will be correct to use the term "plunge", but until then a fluctuation of 5 percent basically is little more than statistical noise . . .
If there is going to be a "plunge" in the near future, it will begin tomorrow, except that the mutants who currently are entertaining themselves by pretending that the stock markets are intellectual versions of "Super Mario" will be deluded by visions of Black Friday shopping extravaganzas and dreams of markets that only go up but never go down . . .
The prudent advice is that there always is a possibility that everything might get better, but the reality is that it will get much worse very quickly once the slower folks manage to connect the dots . . .
The FACT of the matter, which is well understood in Economics, is that there are only two historically proven ways to exit a deeply troubled economy:
(1) massive Keynesian spending on vast infrastructure, high-technology, and creative arts projects . . .
(2) global thermonuclear way . . .
And the last time the economy was in this big of a mess it required several rounds of (1) and (2) to get the economy back in reasonably good condition . . .
By the time it is abundantly obvious, it will be too late to do much of anything if one happens to be locked into stock market investments . . .
As a bit of a clue, a stock certificate will not till the soil for a vegetable garden, and a stock certificate will not provide as much warmth in the winter as an airtight wood stove with a catalytic converter and several cords of seasoned firewood, really . . .
Really! :-o
wow...
and just this morning - the stock market had dropped 250 points over concern for mounting European debt, now it's because of the "Suppa Committee" failing. Maybe by dinner time it will have dropped because the wind started blowing to the east...
OBAMA HAS TO GO. This guy is RUINING this country. What a dumb azz and administration, unbeilievable.
So tell us marilee -- just who running for president as a republican isn't a dumb azz??
Wall Street over-reacts to everything -- both good news and bad news. Take a look at the DOW on Jan 2, 2011 and it's just about the same as it is today. The last 3 month have been 200 up, 300 down, 400 up. By the end of the end of the week we will see a huge uptick.
Wall Street doesn't overreact to ANYTHING. careful manipulation by those who control stock prices - the same people who can also invest in the stocks whose prices they control - is what drives the market. Anyone who believes that this market is "free" is either complete idiot, or a liar who is jumping into the on-going scam with both feet.
LMAO
For every seller, THERE IS A BUYER.
Ask yourself...who is BUYING STOCKS when they are PLUMMETTING?
The answer to that question tells you who is ripping off who.
No "over-reacting" involved...except from those individual marks - oops, my bad, I meant INVESTORS - who have been manipulated into panic selling.
My vote is for the 99%. The 1%ers can fend for themselves. Thank you.
"
Wall Street tumbles"... good
Wall Street is not a part of my America. I'm not that interested in foreign economies except maybe England and Canada
Old rich white people playing with other peoples money to get Richer. An No one is going to stop them.
No prejudice there is there??
Supercommitte = Super joke.
its time to rewrite the constitution. if in a time of crisis congress has no power to act to find a solution,or just refuse to do so,then dissolve it ,let an emergency caretaker government take charge ,hold elections within 30 days and elect new people to the house and senate. out with the old , in with the new. the new ones ,no doubt would get the message ,they would stop playing politics and get down to business.
I like your attitude turiddhu!
The market dove because we are in a depression. It has nothing to do with Europe, the debt committee or any of the other things that the libby press screams about. We are in a depression, we will stay in a depression until Oil drops 80 bucks a barrel, jobs that have been sold to slaver nations come back to the US, the national debt is dealt with and the libby's stop blaming everything on the right. Grow up folks, it took both side of the congress screw up and it will take the people to stop playing blame games and vote out the incompetent incumbents and treasonous president. Stop your bitching.
Congress should be outsourced!
That's an idea, however non-executable it might be !
I guess the only way to get out of this mess will be to completely "clean house".
From the smallest city Government Office, all the way to congress, left and right.
And don't worry about the scare tactics of "People eating rat meat" on the streets if Wall Street collapses, because we are already there.
As far as dealing with this so called super committee, we probably are better off if they do nothing, and let the automatic cuts take effect ( Something they will not allow to happen anyway), just wait and see.
Once again the politicians of both parties screw us all.
This is 100% about Republicans taking a pledge and refusing to even consider raising taxes on the mega rich who have bought their party. There is no compromise possible with a group who has already decided not to compromise. What is amazing to me is that anyone who is not rolling in money continues to vote Republican. Do you really believe you deserve to be raped for the benefit of the rich?